Micro and Macro Policies in the Keynes+Schumpeter Evolutionary Models

Giovanni Dosi, Mauro Napoletano, Andrea Roventini, Tania Treibich

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

This paper presents the family of the Keynes+Schumpeter (K+S, cf. Dosi et al, J Econ Dyn Control 34 1748-1767 2010, J Econ Dyn Control 37 1598-1625 2013, J Econ Dyn Control 52 166-189 2015) evolutionary agent-based models, which study the effects of a rich ensemble of innovation, industrial dynamics and macroeconomic policies on the long-term growth and short-run fluctuations of the economy. The K+S models embed the Schumpeterian growth paradigm into a complex system of imperfect coordination among heterogeneous interacting firms and banks, where Keynesian (demand-related) and Minskian (credit cycle) elements feed back into the meso and macro dynamics. The model is able to endogenously generate long-run growth together with business cycles and major crises. Moreover, it reproduces a long list of macroeconomic and microeconomic stylized facts. Here, we discuss a series of experiments on the role of policies affecting i) innovation, ii) industry dynamics, iii) demand and iv) income distribution. Our results suggest the presence of strong complementarities between Schumpeterian (technological) and Keynesian (demand-related) policies in ensuring that the economic system follows a path of sustained stable growth and employment.

Original languageEnglish
Pages (from-to)63-90
Number of pages28
JournalJournal of Evolutionary Economics
Volume27
Issue number1
DOIs
Publication statusPublished - Jan 2017

Keywords

  • agent-based model
  • innovation
  • evolution
  • innovation policies
  • Macroeconomic policies
  • Income inequality
  • Disequilibrium dynamics
  • CREDIT
  • Innovation policies
  • SPECIFICITIES
  • INFORMATION
  • BUSINESS CYCLES
  • FIRMS
  • OECD COUNTRIES
  • Agent-based model
  • DISTRIBUTIONS
  • Innovation
  • PRODUCTIVITY
  • INVESTMENT
  • Evolution
  • OUTPUT GROWTH

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